Debt dispute leaves Missouri man in limbo in China

AP, ST LOUIS, MISSOURI

An American involved in a business dispute has been stuck in China for five months after the Chinese government refused to let him leave.

The Chinese government forced Steve Fleischli of Labadie, Missouri, to surrender his passport in a dispute over his company’s unpaid debt to Chinese firms. Complicating matters is that he has lost his job since going to China on business in January.

Many of the details of the case, including exactly why Fleischli was fired from his job, are unclear. However, his story offers insight into the perils of a Western businessman doing business in China, especially when commercial disputes are involved.

The US State Department declined comment on his case, but its Web site says there is little it can do to intervene on behalf of Americans in situations like Fleischli’s, which can take years to resolve.

“I think he’s more frightened about the comment that sometimes these things go on for years, rather than about his personal safety,” said Fleischli’s attorney, Mitch Margo.

Fleischli, 37, began his career at Washington, Missouri-based NorthPole Ltd 11 years ago and rose to CEO. The company is a leading maker of outdoor gear, including tents and foldable camping chairs. Warburg Pincus, a global equity firm, is NorthPole’s majority owner.

Times got tough for NorthPole in recent years as prices for materials increased and retail orders slowed. The company owed money to suppliers in China. Margo said Fleischli even loaned NorthPole US$200,000 of his own money last year. The company declined to discuss details of the loan, but it was an issue in Fleischli’s firing.

Fleischli, who has a three-year-old daughter and wife back home in Missouri, decided to fly to China to address concerns of suppliers in person. He left in January in anticipation of a meeting with suppliers at a factory in Xiamen, China, in March. The meeting was a disaster as angry suppliers rioted. After more than a day, police were able to help Fleischli get out of the factory.

He did not respond to interview requests from The Associated Press (AP).

However, that was only the beginning of his troubles.

Because of the unpaid debt to Chinese suppliers, and citing Fleischli’s status as NorthPole’s legal representative in China, a court in Xiamen ordered Fleischli detained, Margo said.

Margo said Fleischli had not even realized he was NorthPole’s legal representative, a role that makes Fleischli the point of contact for the company.

Warburg Pincus declined to comment on whether Fleischli had been told he was the legal representative, but NorthPole documents reviewed by the AP indicated Fleischli was informed through e-mail in 2008.

“I had no clue,” Fleischli told the Post-Dispatch. “I’m an American guy over here in China. I can’t read Chinese. I had no idea what a legal rep even was.”

Then last month, Warburg Pincus fired Fleischli for “gross misconduct.” The company declined to comment further on the firing, but Margo said it meant Fleischli also lost access to the company’s lawyers in China.

It is not clear to Margo or Fleischli why the firing did not absolve Fleischli of his duties as NorthPole’s legal representative. Fleischli has sued NorthPole and Warburg Pincus seeking severance and damages and asking to be removed from that role. Margo believes that would help him get out of China.